Morningstar Marketplace files for Chapter 11 bankruptcy

The market expects to be out of bankruptcy later this year

Alpacas graze on grass between solar panels at Morningstar Marketplace in Jackson Township in this photo from August 2013. Owner Andy Lentz recently filed for bankruptcy. He said the solar project, which he undertook to sell solar energy credits to utilities in Pennsylvania, was a financial failure. (YORK DAILY RECORD/SUNDAY NEWS - FILE)

Thomasville >> Andrew Lentz would have preferred to have already started engineering work on his roughly 20,000-square-foot expo center planned for Jackson Township.

Instead, Lentz and others working for him will spend the next several months fine-tuning a plan that promises to lift his company, Morningstar Marketplace, from bankruptcy and repay his bond holder and investors.

Last month, the Jackson Township market filed for Chapter 11 bankruptcy protection — a move that Lentz traces back to his four-acre solar farm stationed on Morningstar's property.

"We should have not done the solar project," he said. "Financially, it was a total flop."

So, how did Morningstar get into the energy business?

In 2004, the state started to require that, once a utility's rate cap expired, it had to buy a certain amount of solar energy credits each year, said Ron Celentano, a solar energy consultant. Celentano is president of the Pennsylvania Solar Energy Industries Association.

Basically, a resident or a business with a solar energy system would sell credits to an aggregator who, in turn, would eventually sell the credits to a utility. That utility would meet its requirement from the state, and the person or business would receive a check.

Eager to cash in on the credits, a rush of residents and companies from across the state started to invest in solar energy systems.

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In 2010, Morningstar, after completing scientific and economic feasibility plans, secured funding for the project in the form of a $3.4 million bond and other investments, according to the company's bankruptcy filing.

The idea behind the project was to produce enough renewable electricity to power the farmer's market and about 50 homes. The company would no longer worry about voltage drops that plagued its operations on hot summer days, Lentz said.

In July 2011, a month before the solar farm went online, Lentz said, he received some bad news.

When Lentz started his project, solar energy credits sold for roughly $300 per 1,000 kilowatt hours. Months later, the value had dropped to about $10 per 1,000 kilowatt hours.

What happened?

Early on, Pennsylvania was home to hundreds of solar energy systems. After companies and people rushed to cash in on renewable energy incentives offered by the state, that number jumped to about 7,000, Celentano said.

"When you have surge like that, it created an oversupply of credits that the utilities needed to meet the requirement," he said.

In addition, in Pennsylvania, utilities are allowed to shop outside the state for renewable energy to meet their requirements, Celentano said.

State Rep. Greg Vitali, D-Delaware County, has introduced a bill that would boost the amount of renewable energy electric companies would need to buy and would close the loophole on buying power from outside the state.

The bill is in the state's house resources and energy committee, Vitali said.

"Pennsylvania needs to do more to promote alternative energy, and solar specifically," he said.

Still, even if such a bill would pass, credits would likely sell for about $100 -- not a big rise in value, Celentano said.

Lentz said he agreed that $100 will likely be the amount his credits will be worth. He said he has no plans to shut down the solar farm, and said the bankruptcy will have no effect on the market.

Once he's past the bankruptcy, Lentz said, he expects to go full-force into building his expo center, complete with a commercial kitchen and an adjoining auction hall and wedding reception center.

The project, complete with another road entrance for the market and double the parking, is expected to cost about $2.5 million. Lentz said he expects to be able to borrow some of the money he needs.

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